Mizuho Corporate Bank

EUR
Comment: Great excitement as we hit a new all-time high at 1.3834. The Euro is overbought but bullish momentum is strong and at-the-money implied volatility is likely to increase over the coming month. Immediate upside pressure is maintained while above 1.3700.

Strategy: Attempt small longs at 1.3800, adding to 1.3760; stop below 1.3650. Target record high 1.3834, then 1.3875 and then 1.4000.

EUR/JPY
Comment: At the moment there are no signs of instability as we consolidate neatly under the all-time high at 168.95 and above the 9-day moving average at 167.73. However, as other Yen crosses have met our very long term long held targets, a more cautious approach is warranted. If we can hold above 167.50 again today another upside probe is likely. The Euro is no longer overbought against the Yen and we maintain our target at 170.00 for some time this month.

Strategy: Strategy remains unchanged: attempt small longs at 168.00, adding to 167.75/167.50; stop well below 167.00. Cover ahead of 168.95 but look to re-buy on a sustained break above 169.15 for 170.00/170.50.

GBP
Comment: Sterling the best performer this week as people begin to wake up to the fact that it is a high-yielding quasi Euro. Chart resistance few and far between which is also propelling Cable higher. Having got to 2.0500 as expected, we feel that a bout of consolidation around here is a real possibility. The problem is that so many have got the US dollar weakness completely wrong that there are still many positions that need to be sorted out and so trends might continue for longer and further than our current conservative estimates. One way or another we continue to feel that until year-end at least persistent and possibly chronic US dollar weakness is the most likely scenario.

Strategy: Possibly attempt tiny longs on a drop to 2.0450 but be prepared to add to 2.0350; stop well below 2.0250. Target 2.0550, maybe 2.0700.

JPY
Comment: Holding above the top of the Ichimoku ‘cloud’ (121.44 today) but note that momentum is now bearish. The moving averages have turned negative and the longer we hold below these the sooner we are likely to drop below 120.00 (last week’s low). Expect slightly nervous consolidation below 122.20 this morning, probably with cautious downside probes at 121.50.

Strategy: Attempt small shorts on a bounce to 122.00/122.15; stop above 122.70. Cover half of shorts at 121.50 and the other half ahead of 121.15.